Tax Free Savings Accounts (“TFSA”) – Beneficiary Designations

TFSA’s have now been around since 2009.  If you have not made any contributions before, as of 2016 you can contribute a maximum of $46,500, and each year after 2016 you will be able to contribute an additional $5,500 (the annual contribution amount being subject to indexation).

Any income and capital gains in your TFSA are tax-free to you, so a TFSA should certainly be part of your overall savings portfolio.

Like registered retirement savings plans (“RRSP”), you have the ability to designate a beneficiary on your TFSA.  Unlike RRSP’s, a TFSA has a third possible designation, the “successor holder”, which is still not well understood by many, and the differences in the designations can have a significant impact to your Estate.  The only person that can be a “successor holder” is one’s spouse.

It should be mentioned that you may not have ANY TFSA beneficiary designation.  In the case of a self-administered TFSA account (i.e. one you opened through an online brokerage), the default may be no designation until you to file a “beneficiary designation form” to have one added to the account.  Your beneficiary designation is typically shown on your investment statements, if not contact your financial institution to confirm your designation.  In the case of no designation made, the default on your death is your TFSA gets paid to your Estate.

Here are the income tax and probate fee differences between the designations:

  1. No designation (default Estate) / Estate designated as beneficiary:
  • Tax on any increase in value up to date of death - none
  • Tax on any increase in value after date of death – fully taxable to Estate as income
  • Subject to BC probate fees – yes


  1. Specific individual and/or spouse designated as beneficiary:
  • Tax on any increase in value up to date of death - none
  • Tax on any increase in value after date of death – fully taxable to individuals and/or spouse as income
  • Subject to BC probate fees – no


  1. Spouse designated as Successor Holder:
  • Tax on any increase in value up to date of death - none
  • Tax on any increase in value after date of death – none
  • Subject to BC probate fees – no

So if you have a spouse, you should ensure that they are designated as the successor holder of your TFSA.  This ensures, on your death, they step into your shoes as owner of your TFSA, effectively doubling the amount of TFSA that continues to grow tax-free.  If you only designate your spouse as beneficiary, this is not the same as designating them as successor holder, because your TFSA will not continue to grow tax-free in their hands upon your death.

For more information, contact your Chartered Professional Accountant or financial institution. You can get more information at:

Closer Connection Exemption Statement

FloridaAre you one of the lucky Canadians who choose to spend the dreary winter months in the USA?  Do you consider yourself to be a snowbird?

Did you know that there are limitations on the number of days you may stay in the USA?

Did you know that your extended stays in the USA may have tax implications over the border?

Did you know that you may be required to file a special declaration called the Closer Connection Exemption Statement (form 8840) to be exempt from paying taxes in the USA?

To determine whether you must file this declaration, you must add up the number of days (or part days) you spent in the USA in 2015 plus one-third the number of days spent in 2014 and one-sixth the number of days spent in 2013.  If this calculation adds up to 183 or more days and you were in the USA more than 30 days in 2015, you may be considered to be a US resident for tax purposes under US domestic tax law.

If you make frequent visits to the USA or if your visits are for extended periods of time, we advise you to look carefully at your travel to the USA. You want to be proactive and do this calculation annually and inform your accounting professional when you file your personal tax return. Note that in the past each country couldn’t track the number of days you were in their country as they only saw when you entered their country.  Now Canada and the US share your entry dates with each other, so they know exactly how many days you were in their country. 

The form 8840 must be filed on or before June 15th and you don’t want to miss the deadline.

Charitable Donations

charity11The holiday season is a great time to make the most of your charitable donations!

For so many of us, the holidays mean a time of giving, and there are a number of causes to choose from for your donations. Whether you are a first-time donor, or even a long-time donor, these eight tips are worth a read. This holiday season; make the most of your charitable donations when it comes to tax time!


Tax Free Savings Account

The Tax Free Savings Account (TFSA) has been around since 2009, yet many people still don’t fully understand this savings product.  Here are few common misperceptions:

  1.  I can only put in $5K, so my income, and hence tax savings, would be minimal, so what’s the point?  Well, sure in 2009 that was true, but that $5K was per year, was indexed to inflation, and was increased to $10K per year in this last Federal budget.  So if you haven’t yet put any money into your TFSA to date, you should now be able to contribute $41,000! 
  2. But I can only get minimal interest income on my money.  For whatever reason TFSA’s seem to be marketed like a cash savings account with great introductory interest rates.  The reality is you can invest within your TFSA just like you do in your RRSP.  So if you invest the cash in your TFSA in equities, then you can in fact get a much higher return than interest rates, all tax free.
  3. TFSA’s are great because I can pull out my money at any time without penalty.  While this is technically true, there are two things to watch out for here.  One, if you pull out the money, you have to wait until next year to re-contribute it, otherwise, if you don’t have the TFSA room, you will face a penalty tax on an over-contribution.  Though this seems unfair and silly, presumably the law has been structured this way so that CRA can properly track your contributions and withdrawals year over year.  Two, if you’re going to contribute to a TFSA and just pull it out to buy the new fancy toy every few years, it sort of defeats the purpose of using your TFSA for a retirement savings vehicle.  In this respect the RRSP may be the better choice for you because you save taxes on the contribution, and there is a penalty for withdrawing the funds, thus giving an incentive to keep your money saved.  But the choice of whether you should buy TFSA or RRSP really depends on your specific situation, so best is to get help from an accredited financial

For more information on TFSA’s visit